Randall Rothenberg: June 2008 Archives

If you are a Web publisher earning less than $1 million annually in advertising revenue
and with five or fewer employees, you can help save the ad-supported
Internet. I urge you to join the Interactive Advertising Bureau and become part of the small business army we are mobilizing to stop politicians from unfairly and inappropriately regulating digital advertising.The threat is very real. As I have outlined in previous postings,
forces arrayed in Washington and multiple state capitals are
specifically targeting the business infrastructure that enables small
Web sites to support themselves through advertising sales. Although
these advocacy groups have provided no evidence of public harm, their
efforts have resulted in a flurry of regulatory proposals which, if
enacted, would severely hinder the ability of small publishers to
support themselves with advertising sales, and impair the ability of
small businesses to use interactive advertising to market themselves.

I
believe these proposals have received little attention from marketers,
media and publishers because they have been hidden on legislative
calendars in Albany, Hartford, and Springfield, or been negotiated
behind closed doors in Washington, away from our ecosystem’s business
leaders. Moreover, because the proposals state that they seek to
control “behavioral marketing” or “third party networks” or “online
preference marketing,” publishers that do not engage in such practices
or with such practitioners believe they are safe.

But in fact,
these proposals are so broad, they will put virtually all interactive
advertising practices — and even many mainstream marketing practices
— under a strict regulatory regime. Business leaders need to start
paying attention now, or the underpinnings of the “free” — which is to
say ad-supported — Internet will come undone.

Undermining Advertising Research

Consider a bill that has been before the New York State Assembly, which aims to curtail “online preference marketing.” It defines “online preference marketing” as “a
process used by entities whereby data is typically collected over time
and across web pages to determine or predict consumer characteristics
or preference for use in ad delivery, including the use of
non-personally
identifiable information.” But employing non-identifiable data to
predict consumer preferences for use in ad delivery is, in fact, the
very definition of advertising research. Were the New York bill to pass, a mainstay of business development for 120 years would, for the first time, fall under a strict regulatory regime - forcing small Web publishers and their
advertisers to incur legal and lobbying expenses they cannot afford,
and just for New YorkState.Or look carefully at Connecticut General Assembly Bill 5765.
It offers the same, sweeping definition of “online preference
marketing,” and goes on to say that any publisher offering it through a
“third-party
advertising network” must additionally give consumers the opportunity
to “opt out” from receiving it. This means consumers, for the first
time, would be able to force advertisers to stop providing them ads -
but only if those ads are relevant to their interests! Presumably,
mass-distributed “spam” advertising would still be protected.

The Connecticut
bill also would allow consumers to pull non-identifying data they
generate out of the aggregated databases that are commonly used in
market research to improve products, services, and marketing. To put
this in perspective, this is the equivalent of allowing you, me, or
anyone to demand that a grocer not use our anonymous checkout-counter
scanner data to determine when to restock a product.

These state bills have been tabled — for now. But consider the Federal Trade Commission’s recommendations
for self-regulatory principles for “online behavioral advertising.” The
FTC has been a good partner with the interactive media and marketing
industries, and has encouraged us, for the most part beneficially, to
develop an effective self-regulatory mechanism to guard consumers’
legitimate interests in identity protection and data security. Yet even
the FTC has succumbed to the fear-mongering of anti-business advocacy
groups, and HAS offered breathtakingly broad definitions that could
severely hamper the activities of small publishers and marketers.

The
FTC defines “behavioral advertising” as “the tracking of a consumer’s
activities online,” and would give consumers the right “to choose
whether or not to have their information collected for such a purpose,”
apparently even if it is anonymous and non-identifying. Yet one such
“tracking activity” is the measurement of Web site audience traffic -
the central measure by which advertising prices are established.
Another such “tracking activity” is the measurement of advertising
delivery - the core determinant of whether the publisher gets paid by
the marketer for running its ads! Thus, in its recommendations for the
self-regulation of what it calls “behavioral advertising,” the
commission has made suggestions that would break longstanding processes
essential for the management of media companies in the U.S.The most unfortunate aspect of these proposals is that they are utterly unnecessary.The IAB
and its members vigorously support the principle of consumer control
over their media consumption. Indeed, consumer control is one of the
fundamental reasons interactive media have grown so quickly in
popularity. And consumers have all the tools they need to control all
forms of data collection in online media and advertising, built into
their browsers and into security packages, many of them available free
online.

Because so
much attention in our industry recently has focused on
multi-billion-dollar consolidation battles, it’s easy to assume that we
lives in a land of giants. But nothing could be further from the truth.
Interactive media is a dynamic field suffused with small entrepreneurs
with big dreams. When you think of IAB’s 375+ members, you may conjure up the great names of the online and offline media world - Google, Yahoo, AOL, MSN,
The New York Times, Time Inc., CBS, and Walt Disney among them. But the
majority of our members - 61 percent - are small businesses, earning
from $0 to $8 million annually in advertising revenue.

According to the Pew Internet & American Life Project, more than 32 million American adults have used online classified ads for selling or buying. eBay — which is both an advertising vehicle and a retail mechanism for its sellers — says 768,000 small businesses across the U.S. use this online marketplace as their primary or secondary marketing channel.Blog networks, supported by advertising, helped would-be media moguls generate 112 million blogs worldwide; in the U.S.,
as of July 2006, some 12 million American adults, about 8 percent of
the American population, were publishing their own blogs, which were
being read by 57 million others, according to Pew.

Publishing’s Long TailThose
blogs are part of the most remarkable communications phenomenon since
the invention of the printing press: the explosion of small interactive
publishing businesses, untold thousands of which support themselves
through advertising sales.

While many of these businesses employ
direct sales forces, I pointed out at Congress yesterday that an
essential aid to them has been online advertising networks consisting
of hundreds, thousands, even tens of thousands of sites. These online
networks are the moral equivalent of the broadcast radio and television
networks with which
we grew up; they have technological infrastructures that can get
contextual or behavioral advertising and ad revenue to these small
sites, wherever they are located.

But
there’s one crucial difference: Instead of delivering the same
programming - and for the most part the same ads from the same giant
marketers — at the same time across groups of local affiliates, online
networks allow myriad voices to flourish, serving myriad interests and
needs, in the tiniest nooks and crannies of our culture.

No one knows how many of these “long tail” publishers are in the U.S., but here’s a sample gathered by the ThinkPanmure equity research firm.
The 24/7 Real Media network sells and places ads for 1,000 Web sites.
The Blue Lithium Network, owned by Yahoo, reaches 119 million unique
U.S. users through 1,000 publisher sites. Burst Media has 4,200
ad-supported sites in its network. Tacoda, a network acquired last year by AOL, delivers behavioral ads to half the U.S. population, across 4,500 sites. The Adbrite auction-based ad marketplace represents 19,000 Web publishers.

How diverse are these publishers? We don’t have a census of the whole, so to prepare my Congressional testimony, I asked my IAB
team and some of the networks among our membership for examples of
their favorite small, ad-supported publishers. Interestingly, many of
them are mothers who are using interactive tools and services to
develop home-based businesses around their passions. Here are a few
examples:

Baristanet.com
is a community site started by three local women for the area of
northern New Jersey where I grew up. Its advertisers include a local
hospital, Montclair Family Dentistry, and Dial Pest Control of Roseland.

Dooce.com
is a blog started by a stay-at-home mother in Salt Lake City, who was
the valedictorian of the Class of 1993 at Bartlett High School in
Memphis, Tennessee. She carries ads from the Disney Vacation Club and
Verizon.

Bakeorbreak.com
is run by a woman in northeast Mississippi, who subtitles her Web
publication “Adventures of an Amateur Baker.” It’s filled with recipes,
sells cookbooks, and carries ads for M&M’s, Perdue chicken, and Bertolli olive oil. Some of those ads are sold by Martha Stewart Living Omnimedia, an example of the growing symbiosis between small and large publishers on the Web.

Here are three political sites that cover the spectrum of opinion. Many of you know Dailykos.com, the famous liberal political blog; look closely, and you’ll see that it’s supported by ads, many of them placed by the Google Adsense network, from PBS, the online t-shirt maker Café Press, and others. Latino Issues, by contrast, is a conservative Latino blog, with some ads also sold by Google. Its advertisers include the dating service LatinoAmericanCupid.com.And Confederate Yankee
is an ad-supported site, via the Pajama Network, that’s a hybrid of
conservative and liberal, Northeast and Southeast sentiments and
values: Advertisers include Omaha Steaks and FTD, the floral company.

Womenslacrosse.com is the central meeting place for women who participate in the oldest American sport. It’s a family business run by Founder and CEO Cathy Samaras of Annapolis, Maryland, and its advertisers include the Kaplan test preparation company, and the Bowie Baysox Class AA minor league baseball team.

Scienceblogs.com is a collection of 90 ad-supported science sites covering fields from neurophilosophy to quantum mechanics to tetrapod zoology. Its offices are in LA, Washington, New York, London, Munich, and Shanghai, but its bloggers come from all over: Iowa, Colorado, Massachusetts, New Jersey, and Virginia, among other places. Its advertisers include PerkinElmer and Dow Chemical.

AfricanSisters.comwas
formed in 1999 in Garland, Texas by a group of black women to help
women of color build businesses, increase employment and build revenue.
Its advertisers include the iGourmet.com “tea-of-the-month club,” Crockpot cookery, and Kmart.

IAB Thinks Small

As the IAB team surveyed the regulatory landscape this past year, it
occurred to us that few regulators or legislators are aware of this
small business landscape, and how interactive media and advertising
have served, in essence, is its railroad: the network that enables
these tiny markets
to exchange value within and among themselves. So we asked our Board of
Directors and then our entire membership to approve a change in our
bylaws, and allow small publishers to join the IAB at an advantaged
price — $500 in annual dues, or 1/20th the minimum dues tariff we
charge General Members.I’m
pleased to say our membership approved this Small Publisher Membership
category by an overwhelming majority last week. So if you think small
(or work with publishers who do) please let them know about our offer.
(I’m equally pleased to note that when we canvassed about a dozen of
our network-oriented members and asked if they would help us market
this new membership to their publisher affiliates, each and every one
enthusiastically answered in the affirmative.)IAB
Small Publisher Members will have business insurance and services
discounts; preferential pricing for IAB events; special webinars and
seminars designed to teach small publishers the contours of the
advertising and marketing industries; and membership in the IAB’s new
Small Publishers Committee. And, of course, there is representation by
the IAB in Washington and across the U.S. Like our Associate
Memberships, these will not carry voting rights — but any Small
Publisher Member that grows large enough (or otherwise wants advanced
participation) is free to join IAB as a General Member at the normal
dues rates.Our first signup was Tim Carter, the founder and proprietor of Askthebuilder.com in Cincinatti, Ohio. I wrote about Tim
— and his remarkable development from a self-syndicated, hand-to-mouth
newspaper columnist to an online media mogul earnings hundreds of
thousands of dollars in ad income a year, thanks to network-based sales
— in an earlier “clog” posting. When I asked Tim (who also testified
at the House hearings yesterday) why he was joining the IAB, here’s
what he said:

“I decided to join the IAB for any number of reasons. Primarily, I want
to be connected with an organization that’s ahead of the curve, and
gives me an enormous competitive edge in the marketplace. I also enjoy
being surrounded by other successful people who help me to achieve
goals I set for myself. I also love the fact that the IAB represents
small digital publishers like myself in Washington. I don’t have the
time nor resources to be heard, but politicians need to know the facts
about what is happening in the Internet world I work in. The IAB
delivers a fair and balanced perspective to these lawmakers.”

I’m
incredibly proud to have Tim Carter as a member of the Interactive
Advertising Bureau. But we should aspire to make sure that hundreds of
thousands, even millions, of Tim Carters can flourish in this country,
building businesses through the communications, advertising, and
services available online. We can do that by assembling together, to
learn each others’ best audience-building and marketing practices, and
to ward off the ugly and unnecessary hand of anti-Internet regulation.Put simply, IAB WANTS YOU!. Click here and join today.